Rich Dad Poor Dad

By: Robert T. Kiyosaki and Sharon L. Lechter

 

This is a link to a video of the author talking about the book:

http://www.betterdaystv.net/play.php?vid=190

 

These are two of my favorite quotes from the book:

 

"The love of money is the root of all evil."  OR "The lack of money is the root of all evil."

 

An asset is something that puts money in my pocket. A liability is something that takes money out of my pocket.

 

Robert Kiyosaki - Eduacted in Hawaii. he joined U.S. Merchant Marine Academy in 1969. After graduation he was hired by Standard Oil of California. After 6 months he resigned and joined Marine Corps in Vietnam. Then he joined Xerox as salesman. He retired from his business at the age of 47 and now does have seminars and teach people.

Sharon is CPA consultant for a toy industry.

 

This book is a very useful book for someone who is looking to get started my making some investments, the author breaks the book down into 7 simple lessons.

 

Lesson 1: The Rich Don’t Work For Money ---  In this both Mike and Robert try to meet Mike's dad and work for him and learn stuff

 

Lesson 2: Why Teach Financial Literacy? ---  He explains some examples about how people in the past have lost money. He gives an example of basketball player who was earning millions at the age of 24 was now working at carwash at the age of 29. He describes the cash flow pattern

 

For instance,the cash flow pattern of a poor person, or a young person still at home:

            Job (provides income)-> Expenses(Taxes Food Rent Clothes Fun Transportation)

            Asset (none)

            Liability (none)

 

the cash flow pattern of a person in the middle class:

            Job (provides income)-> Expenses(Taxes Food Mortgage Clothes Fun Transportation)

            Asset (none)

            Liability (Mortgage Consumer loans Credit Cards)

 

the cash flow pattern of a wealthy person:

            Assets(stocks bonds notes real estate intellectual property)->income (dividends interest rental income royalties)

            Liabilities (none)

 

He mentions that

            1. Loss of time, during which other assets could have grown in value.

            2. Loss of additional capital, which could have been invested instead of paying for high-maintenance expenses related directly to the home.

            3. Loss of education. Too often, people count their house, savings and retirement plan as all they have in their asset column

 

 

Lesson 3: Mind Your Own Business -- pay off your debts and start investing as soon as you can into things that can generate revenue (good message)  --

In 1974, Ray Kroc (McDonald's founder)  -- McDonald's today is the largest single owner of real estate in the world, owning even more than the Catholic Church

I cringe every time I hear someone say to me that their net worth is a million dollars or $100,000 dollars or whatever. One of the main reasons net worth is not accurate is simply because the moment you begin selling your assets, you are taxed for any gains

 

 

Lesson 4: The History of Taxes and the Power of Corporations  --- Robin Hood story . He joined Marine Corps and Xerox(salesman. at that time he started his own real estate corporation)

Finacial IQ is basically accounting, investing, understanding market and then law

 

 

Lesson 5: The Rich Invent Money  --- he starts of with the story of video about Graham Bell. When he approached the Western Union for loan of 100K he was denied as the amt seemed to be ridiculous. But now its multi-billion dollar company ie AT &T

 

 

Lesson 6: Work to Learn – Don’t Work For Money  --

he recalls an incident where he recommends one of the best and young reporter to take classes on sales so that the author can have best selling author. He mentions about his intial career.

So in marine corps he tried to study about south pacific and east  side trades. He joined Xerox as salesman. My first product, the nylon and velcro wallet. mention about companies hire MBA and then put them in different areas and then after a time span they become CEO.

he calls the employees as hamster...was it a kind of ridicule.... there are people like Jack Welsh who worked for GE for 40 yrs

 

Lesson 7 : Overcoming Obstacles

            a. Fear. -- he mentions balanced

            b. Cynicism. -- Im not smart. What if market crash

            c. Laziness.

            d. habits. -- mentionds first pay urself and then pay others later

            e. Arrogance. - arrogance+ignorance

 

Other quotes I like:

            1. rich often has very little connection to material possessions

            2. rich people dont work for money but the money works for them

            3. everyone wants heaven but nobody wants to die

            4. Broke is temporary, and poor is eternal

            5. A fool and his money is one big party

            6. An intelligent person hires people who are more intelligent than they are.

 

 

Some more criticism -

1. Rich Dad, Poor Dad is one of the dumbest financial advice books.It contains many factual errors and numerous extremely unlikely accounts of events that supposedly occurred

2. He has not disclosed his real estate success

3. Its basically a personal finance perspective told in the form of a parable

4. This book says that asset is one that generates cash flow. But buying a home according to this book becomes a liability

 

Reviewed By: Swetha Bhendigeri